Businesses, GOP demand Calif. regulatory relief

By Adam Weintraub

Associated Press

Published: Saturday, May 28 2011 3:11 p.m. MDT

"Plenty of companies start up in California and that's hugely important to our economy, but when you get to the next level they don't generally grow big here," said Loren Kaye, president of a think tank affiliated with the California Chamber of Commerce.

And for Brown's administration grappling with weak economic growth, that message resonates.

A broad coalition of business interests has given conditional support to the governor's budget proposal for next year in exchange for promises that he'll improve the state's business climate.

Brown's revised budget proposal, released this month, included five-year extensions of the state's sales tax and vehicle license fees, and a four-year extension of higher income tax rates, if approved by voters. But it included sales tax breaks for purchase of business equipment and incentives for companies that create jobs. Senate President Pro Tem Darrell Steinberg, D-Sacramento, has backed a bill to eliminate duplicate regulations and streamline permitting.

"We believe the governor is on the right track," said Carl Guardino, president of the Silicon Valley Leadership Group, which represents 340 companies employing 250,000 people in all. The group was one of a dozen business organizations that recently called for a budget compromise that includes tax extensions, lower pension costs for public employees and regulatory reform, particularly to reduce the delays caused by reviews under the California Environmental Quality Act.

Lt. Gov. Gavin Newsom, a Democrat, is also working with Assembly Speaker John Perez, D-Los Angeles, on a bill that would revamp the state's economic development efforts to encourage job growth and attract businesses.

Newsom admits to having his own troubles with CEQA, both as a business owner and as San Francisco mayor, where environmental challenges kept plans for city bike lanes on hold for four years. That's one area where he believes California could make regulation more predictable and reduce the risk of litigation for businesses while still preserving environmental protection.

"It's a non-partisan issue, job creation," he said. "I feel like the time is right and the politics are changing."

Even labor unions, hurt by the economic downturn that has cost members their jobs, are more receptive to regulatory changes.

"I think there's some common ground," said Steve Smith, spokesman for the California Labor Federation. He noted that the union will continue to defend worker protections such as overtime after eight hours of work.

But changes may not come soon enough for some businesses.

Andrew Puzder has become something of a poster CEO for the regulatory reform effort. Puzder runs Carpinteria-based CKE Restaurants, which operates the Carl's Jr. and Hardee's fast-food chains. Early this year he announced that he would halt new restaurants in California and instead open 300 restaurants in Texas in the next decade, adding some 8,000 jobs including managers who make more than $40,000 a year and bonuses.

Puzder estimated that construction review and permits in California can add $50,000 and as much as two years to the task of opening a restaurant. In Texas, he said, it can take as little as six weeks from signing a lease to pulling building permits.

In California, Puzder said, managers are treated as hourly employees and the company has to pay them overtime and limit their hours to protect itself from lawsuits.

Tom Thompson is a CKE franchisee with 59 restaurants in the San Francisco Bay area and the Central Valley. He said he went through a three-year process of trying to build a restaurant in the Fresno area only to see planners at the state and local level impose improvements for the disabled at an adjacent intersection and an unwanted double drive-through lane. He decided to pull the plug.

"That was five years ago; the property is still vacant," Thompson said.

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